National integrity systems : TI country study report : Nauru

Abstract

Nauru is a single Island state with a land area of 21 Km square and a population of approximately 11,300. It is one of the world's smallest Republics and was Nauru part of the German territories from 1886 to 1914. It was then mandated by the League of Nations to Australia, New Zealand and United Kingdom. Nauru was administered by these three powers through the Trusteeship system of the United Nations after 1945 until it was granted full independence on the 31 January 1968. Nauru was one of the richest nations in the world on a per capita basis, when its export of phosphate rock, the sole and only export, was at its peak. Trouble for its fragile economy began when world price of phosphate began to fall in about 1988. The economic decline sharpened in the late 1980s and early 1990s but Nauru failed to, or did not want to, take the necessary steps of reducing expenditures commensurate to the fall in revenue by both the Nauru Phosphate Corporation (NPC) and the Government. As a consequence, Nauru began eating into its reserve funds that were held with Nauru Phosphate Royalties Trust (NPRT) and drawing on its savings with Bank of Nauru (BON). Moreover, these economic difficulties have been compounded through the apparent gross mismanagement of investment funds with NPRT and corrupt practices elsewhere.